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China's Energy Crisis Sends Pollution Across Asia
World Bank Press Review (1 July 2004)

China’s broad campaign to build more coal-fired power plants is reversing years of improvements in controlling pollution and is fouling the air of the nation's neighbors, writes The Far Economic Review. The increase in power-plant construction has come in response to what is being treated as a national emergency: a persistent shortage of electricity.

But the government's vigorous response to those shortfalls is producing other problems. Since most of China's power plants, old and new, are fuelled by coal, their smokestacks are sending ever more coal dust and sulphur dioxide into the air. Air pollution has long been a problem in China, but it is taking a real turn for the worse. In 2003, several years of improved air quality were undone, according to official figures. Winds are carrying the noxious mix not only across China, but to next-door neighbors South Korea and Japan - and even as far away as North America. So in addition to the damage it could do to the health of China's own citizens, worsening air pollution threatens to complicate the government's ties with key trading partners and with its own territory of Hong Kong, which is also suffering from air pollution blown in from the mainland. In all those wealthy societies on China's periphery, public concern about the environment has grown in recent years, and China's rapid growth makes it an obvious target for blame.

At a press conference in Beijing in June a number of policies adopted to reduce the impact of coal-burning power plants on air quality were outlined. They include requiring all new plants to install desulphurization equipment, stepping up monitoring of existing plants, and providing incentives to scrub emissions, such as allowing higher tariffs for electricity. Many officials around the region are keen to encourage any measures that would minimize the amounts of pollutants from China that blow across their borders. But they remain wary of antagonizing China, whose economy has become the single-most important driver of growth for the region. Last year, China alone accounted for more than two-thirds of Japan's export growth, and was Korea's largest export market and its biggest target for direct investment.

The Japan Bank for international Cooperation has lent 145 billion yen ($1.3 billion) to China over the past decade to help reduce emissions from power plants. But single-country institutions like the JBIC, and multilateral equivalents such as the Asian Development Bank and the World Bank, can only lend in response to requests from governments. Their challenge, therefore, is to persuade Beijing to ask for help in reducing emissions without alienating the government by making it a public scapegoat for worsening air quality in the region.

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